CHARLESTON, W.Va. — A top official with Appalachian Power Company testified Tuesday before the state Public Service Commission that the company’s plan for the $235 million it will save because of federal tax reform is aimed at eliminating as many potential rate increases in the future as possible.
“When you look at our proposal on the whole it does,” Appalachian Power Managing Director of Regulatory Services and Finance John Scalzo said.
The PSC began a three-day evidentiary hearing Tuesday morning. The commission will hear from several utilities about their plans for the money saved from the 2017 tax reform act passed by Congress and signed into law by President Donald Trump. Federal taxes make up one component of the rates customers pay for utilities.
PSC Chairman Mike Albert called the review of the plans a “complex proceeding with lots of wrinkles to it.” He said regulatory agencies in other states are holding similar hearings.
Appalachian Power’s $235 million in savings is the most of any utility in West
Virginia. Scalzo said the company believes a holistic proposal, spreading the tax savings over several areas, would be more beneficial to its customers.
“It’s a fair and balanced approach is the way I would characterize it,” he said.
The Appalachian Power plan includes:
–returning $30 million to customers through credits over a three-year period
–$131 million to completely offset the company’s fuel and vegetation control program funding request that was part of an April filing with the PSC
–$19 million reduction in the company’s base rate case filed in May (taking the $115 million request down to $96 million)
–$51 million to reduce next year’s fuel recovery cost rate case
–$1 million for a pilot economic development grant program
State Consumer Advocate Jackie Roberts and others are urging the PSC to order Appalachian Power and other utilities to pass the savings back to their customers in a more direct manner.
Heather Osborne with the Consumer Advocate’s Office told the PSC Tuesday Appalachian Power’s approach is in direct opposition to what many are calling for.
“It (Appalachian Power) has presented a position in this case that (it believes) is more favorable to ratepayers than the position set forth by CAD (Consumer Advocate’s Division), than the position set forth by West Virginia Energy Users Group, than the position set forth by the City of Charleston, the Kanawha County Commission, the (PSC) staff, AARP,” Osborne said.
Scalzo said he’s heard those arguments but sticks by his company’s approach.
“Your position is that it should all flow back to customers. You deem that to be a favorable outcome like everybody else did,” Scalzo said. “Our position is looking at a holistic proposal, we feel that it’s beneficial for customers.”
WV AARP State President Rich Stonestreet told the commission there are many examples in other states of utilities passing the money saved in federal taxes right back to its customers.
“More than 100 utilities across the nation have done the right thing and have already passed the intended savings on to their customers, either voluntarily or as the result of utility commission orders,” he said. “We urge this commission to take any necessary actions to allow residential customers to receive directly the benefits of the Tax Act.”
Scalzo testified Appalachian Power did consider a more direct reduction for its customers but decided that would make further rate increase requests more likely.
“It didn’t seem to make sense to give a refund and a month later (seek an increase),” Scalzo said.
The hearing has witnesses scheduled into Thursday. The witness list includes representatives from Hope Gas, Peoples Gas, Mountaineer Gas, West Virginia American Water, Waste Management and Allied Waste. Kanawha County Commission President Kent Carper is scheduled to testify Wednesday afternoon.
The PSC will likely take several weeks after the hearing wraps up to make its decisions.